Explanation:
The computation of the contribution margin per unit is shown below:
Burt for that first we have to determine the variable expense per unit which is shown below:
Variable costs per unit = $330,000 ÷ 15,000 units
= $22
Now the contribution margin per unit is
= Selling price per unit - variable expense per unit
= $25 - $22
= $3
Therefore, the special order is accepted
And, the preparation of the contribution margin income statement is shown below:
Sales (4,000 clocks × $25) $100,000
Less: Variable cost (4,000 clocks × $22) ($88,000)
Contribution margin $12,000
